Inflation : Measuring Inflation, Degrees of Inflation, Types of Inflation

Inflation can be defined as a sustained or continuous rise in the general price level or, alternatively, as a sustained or continuous fall in the value of money. Several things should be noted about this definition. First, inflation refers to the movement in the general level of prices. It does not refer to changes in one price relative to other prices. These changes are common even when the overall level of prices is stable. Second, the prices are those of goods and services, not assets. Third, the rise in the price level must be somewhat substantial and continue over a period longer than a day, week, or month. Inflation does not mean that all commodity prices are rising. You might have observed that even during period of rapid inflation when prices generally rise fast, some prices may be relatively stable and constant while others are falling. It is the general rising trend in the commodity prices that is referred to as inflation and not only an increase in the price of one commodity. Inflation is considered as an economic evil because it brings confusion and anxiety in consumers and causes economic instability as people change their spending habits and generally act differently when they expect prices to rise. This document will provide you with detailed information on inflation.